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Auto-enrolment rules ‘discriminate against women’

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
08/11/2016

Millions of women are missing out on bigger pension pots because of discriminatory auto-enrolment rules, a report suggests.

The way auto-enrolment minimum contributions are calculated discriminates against low paid and part time workers, the majority of whom are women, the report by the Pensions Policy Institute (PPI) on behalf of provider NOW: Pensions said.

Only those earning £10,000 a year are automatically enrolled but contributions are based on ‘qualifying earnings’. The lower threshold is currently £5,824 and the upper limit is £43,000. Any earnings below the lower threshold or above the upper limit do not qualify for pension contributions.

Removing the trigger and basing contributions on every pound of earnings could improve outcomes for all workers by “thousands of pounds” and would particularly benefit women, the report said.

According to the study, 77% of employees earning less than the auto-enrolment trigger are women. And of the over 50% of part-time workers bringing in less than the earnings trigger, 81% are women.

Changing the rules

The PPI said removing ‘qualifying earnings’ from the auto-enrolment calculation could increase the pension pots of part-time workers by 140%.

Adrian Boulding, director of policy at NOW: Pensions, said: “To end this covert sexual discrimination, government need to act now removing qualifying earnings from the auto-enrolment calculation and revisiting the appropriateness of the trigger when it undertakes its review of auto-enrolment in 2017.”

Frances O’Grady, general secretary of the TUC, said: “Automatic enrolment has been a great policy success. It has ensured that millions of people have pensions with employer contributions for the first time.

“But millions more, the vast majority of them women and part-time workers, remain excluded. The government’s review of automatic enrolment due next year needs to ensure that all workers have the opportunity to build savings for retirement.”

Separate research by NOW: Pensions found 63% of auto-enrolled workers were unaware that minimum contributions only apply to qualifying earnings.